Coca-Cola Amatil's SPC signs deal with China State Farm

Coca-Cola Amatil's SPC and Goulburn Valley fruit brands will soon be sold through Chinese food stores and e-commerce platforms under a distribution agreement with a major state-owned agriculture and consumer products business.

Coca-Cola Amatil's SPC unit has finalised a master distribution agreement with China State Farm Agribusiness Shanghai, a wholly owned subsidiary of China Agriculture Development Group Corp, and hired popular Chinese singer and actress Yiqian Ye as its brand ambassador.

Under the deal, which was signed at an official ceremony in Shanghai last Thursday, China State Farm will distribute Goulburn Valley and SPC packaged fruit to about 4,500 premium bricks and mortar retailers including City Super, Shanghai City Supermarket Co, Lotus Supermarkets, Vanguard Supermarkets and Ole in four major cities.

The products, including Goulburn Valley and SPC plastic tubs, snack packs, cups and, in the second half of 2018, fruit pouches, will also be sold through Chinese e-commerce platforms including JD.com, Alibaba's T-Mall, and NetEase platform Kaola.com.

SPC has appointed export market facilitator The Export Group to advise on its China entry and provide a dedicated multi-lingual sales resource from its Shanghai office.

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SPC managing director Reg Weine expects strong growth in Goulburn Valley sales, given the size of the Chinese market, which is five times that of Australia.

"China represents a significant business opportunity for SPC in the years ahead, and this is an important step in realising our growth strategy," Mr Weine said.

The partnership model with China State Farm enabled SPC to mitigate risk and give it the best chance of success, Mr Weine told The Australian Financial Review.

"We're investing upfront to build the brand and create awareness in the China market – we expect the China business for SPC to wash its face (ie earn enough to cover costs) in the first year or two and be profitable thereafter," Mr Weine said.

"We're taking a very long term view about China, we're certainly not betting the farm."

Zhao Qingyong, China State Farm Shanghai's general manager, said: "We have established strong business relationships with several Australian companies (including a2 Milk) and we are very pleased to be partnering with SPC to continue developing successful businesses in China".

Mr Weine took the helm of SPC two and half years ago after four years as chief executive of Bulla Dairy Company and five years as director of sales and international at vitamin company Blackmores.

In addition to the deal with China State Farm, SPC is taking Perfect Fruit, a fruit-based frozen dessert, into Japan, India and Indonesia with the support of Coca-Cola Amatil and CCA's biggest shareholder, The Coca-Cola Company, following successful pilot programs last year.

SPC currently sells packaged fruit and vegetables in 10 overseas markets including the United States, the United Kingdom, Hong Kong, Singapore, Malaysia, Japan, the Middle East and the Pacific islands.

"It's about taking our branded business into markets where they recognise the importance of clean green produce and where provenance plays a part and there is a consumer segment that is affluent and willing to pay a premium for Australian produce," Mr Weine said.